Red tape ‘costs small businesses 14k’

Small businesses are spending more time and money on complying with legislation, a new survey has revealed.

In a survey of its members, the Forum of Private Businesses (FPB) has found that small businesses spend £16.8 bn to comply with regulations - an average of £14,200 for each firm. Internal costs came to £11bn with £5.8bn being paid for external contractors.

The FPB has more than 4,000 members including many butchers’ shop and abattoirs.

Around 84% of small business owners asked said that they spent more time on legislation than they did two years ago, with around 67% increasing their payment to consultants to help them avoid pitfalls.

Jane Bennett, the FPB’s head of campaigns said: “Despite several government initiatives – some more effective than others - it is clear that we are heading in the wrong direction as far as reducing regulation for small business owners is concerned. We simply want these measures to work properly and for the voices of the UK’s business owners to be clearly heard.

The news comes as the Confederation of British Industry (CBI) called on government to fundamentally alter its attitude on employment law in order to bolster flexibility and foster better employment relations.

The statement from the CBI said that rather than automatically opting for legislation, the government should specify what it is trying to achieve and set out suggested processes in more flexible guidance or codes of practice, an approach that should be applied to EU directives too.

John Cridland, CBI director-general, said: “Traditionally when making employment law governments have tried to specify every last detail of what should go on in the workplace.

“With a strong base of employment rights already in place, we simply don’t need the state telling us how to manage every aspect of basic human relations.

Alistair Cox, chief executive of recruitment specialist Hays plc, said:”Endless red tape and legislation prevents employers and employees from being able to capitalise on the vast number of benefits that flexible working offers. It is time these constraints are removed so that we can get more people into worthwhile work.”